7 Ways To Help A Family Member Financially Without Damaging Your Relationship

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FamilyThis is a guest post by Ron Haynes, the blogger behind The Wisdom Journal. He writes about making wise choices, improving your finances, and living a better life. If you like this article, consider subscribing to his RSS feed.

If anyone should be there for you, it’s family.  What happens when a family member loses a job?  What happens when a family member is hurt or disabled?  What happens when a crippling financial event prevents a family member from paying his or her bills?  How do you help a family member financially without damaging your relationship? Here are seven ways to answer those lingering questions.

1. Give a Cash Gift – I’d rather give a cash gift outright than become a banker. If a family member is in dire straits financially, a gift is a better option if you’re able to give it, than a loan. A family loan has the potential to create bitterness and resentment because it’s riddled with expectations. Gifts are just gifts and they’re much simpler – as long as the giver doesn’t hold it over the recipient’s head.

2. Feed Them – Nothing says family like food and if your family member is struggling financially, a great meal every few days can seem like a Godsend.

3. Prepay Bills – You can also offer to pay utility bills, a mortgage payment, a car payment, or some other bill that may be hanging over your family member’s head. When a family member is in a cash crunch, prepaying a bill can give them a little breathing room for a month or two.

4. Help Set Up a Budget – If your family member is willing, offer to work with him or her to set up a budget. There’s a lot of trust involved in this process so you’ll need to reassure your family member that you’re trustworthy and concerned with their best interest. The reason this cash crisis is upon them may just be a simple matter of redirecting funds.

5. Give Them a Job – If your struggling family member has too much pride to accept unconditional money, offer to employ them in some way. They can help around your home, assist you with landscaping, or even do something more formal (paint your house, work on your car, perform housekeeping tasks). If you do something formal, make sure you spell out your expectations, the rate you’ll pay, and how you’ll deal with poor or incomplete work.

6. Give Non-Cash Gifts – You may not want to help a financially struggling family member with cash, so consider non-cash gifts like gift cards or gift certificates. You’ll have much more control over how the money is spent.

7. Help Them Utilize Government or Charitable Resources – There are many resources that are available to people who are struggling financially:

  • Legitimate debt counselors
  • Career counselors
  • Job agencies
  • Welfare agencies

Sometimes a family member may need help just filling out the forms necessary to get the assistance they need and you can be a big help in that area. Local government or charitable professionals may be able to steer your family member in the best direction to help them recover from their cash crisis.

But for every good thing you can do for a family member to help them out financially, there’s also a bad thing.  Three of the absolutely worst things you can do are:

  • Give Loans – Family loans are sticky situations and rarely go smoothly. Expectations frequently don’t match up between the lender and borrower. That can lead to bitter feelings and other family members choosing sides.
  • Co-Sign Loans – Avoid co-signing a loan for a struggling family member. You are 100% responsible for repayment, even if you never had access to a dime of the loan. Should your family member default, you’ll have to pay and it will inevitably damage the relationship.
  • Involve Other Family Members – This is a private matter and you shouldn’t involve other family members in the process unless the struggling family member wants to.

The most important step is asking specifically what help your family member needs to work their way out of their current situation.  From there you’ll have a better idea of the type of information and assistance they need.

Family and money isn’t always a good mix. But, in tough economic times or when faced with unexpected emergencies, one family member may truly need your financial assistance. Before you commit to helping, be sure to think through what you can and can’t afford to do. And remember, if your own cash resources are limited, there are other effective and creative ways to help your family member.

Published or Updated: April 24, 2010

Comments

  1. Nice Blog about financial help and healthy relationship. Last part is very good.

  2. harrken says:

    I am helping my sister save an emergency fund. We agreed tht for 1 year, I would match her dollar-for-dollar up to $100 a month for each dollar she puts in a savings account, provided that she did not make a withdrawal that month. We started this in January and her account balance is almost $500 now. She has never been a saver and I thought this would give her an added incentative.

  3. Olivia says:

    Great advice. Eventually, after giving cash to the same person over and over the “helping to establish a budget” area has to be addressed. Harrken’s idea is a good one and assumes a measure of transparency too. Thanks for the article and comments.

  4. Why limit it to just family? A very good friend of mine needed help and I gave it gladly. The operative word here is “give.”

    Never loan with the expectation of getting it back unless you use a site like virgin money that help you structure the loan so it is enforceable. But who wants to do that? Better to give than end up in a fight over money with someone you love. If they are worthy of your gift, it will come back to you tenfold. Otherwise, you have the good feeling of knowing you helped someone you care about. I can’t help myself by add these lines:

    Neither a borrower nor a lender be;
    For loan oft loses both itself and friend,
    – Polonius, Hamlet by William Shakespeare, 1602

    Wisdom is ageless!

  5. Ron says:

    @Jessica — when it’s YOUR money, you can use it to help anyone you like! I would venture to guess that you view any friends you’d be willing to help financially as family in one sense.

  6. Ken says:

    These are good tips. I especially like “don’t loan money.” I’ve been burned on this one more than once. I would add one: Pay for him or her to go through Financial Peace University…a great program to help folks get a grip on money.

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